The effect of demand uncertainty on the decisions and revenues in the two-class revenue management model
İktisat İşletme ve Finans
Kocabiyikoglu, A. (2015). The Effect of Demand Uncertainty on the Decisions and Revenues in the Two-Class Revenue Management Model. Iktisat Isletme ve Finans, 30, 95-120.
Please cite this item using this persistent URLhttp://hdl.handle.net/11693/12567
We explore the impact of changes in market conditions on optimal allocation decisions and revenues, within the standard two-class revenue management framework, using stochastic dominance relations. We show that an increase in market size leads to higher revenues, and the number of units allocated to the high-end class increases in its market size. The direction of the change in optimal allocation and revenues in response to changes in the variability of the high-end market depends on the relationship between the high and lowend prices. Our structural and numerical results suggest higher variability in the market is generally detrimental to revenues.
- Department of Management